The Greens have delivered a surprise by deciding to oppose the reintroduction of the fuel excise and gouging a multibillion dollar hole in the budget.

The Government's budget papers show it expected the measure to $2.2 billion over four years.

Labor and the Palmer United Party had already said they would vote against the measure.

The Greens decision means it is now doomed, as political correspondent Louise Yaxley reports.

LOUISE YAXLEY: Petrol excise hasn't changed since 2001, when the former prime minister John Howard announced it would be frozen in a bid to ease public anger over the cost of fuel at the time.

But the Treasurer Joe Hockey announced in the May budget that from August excise would again start to rise every six months on petrol.

The Prime Minister says motorists would pay 40 cents more a week at the fuel pump in the first year.

But Labor's denounced it as a carbon tax, in a deliberate attempt to embarrass the Prime Minister.

And the Greens' new position against reintroduction of excise indexation means the Government doesn't have the numbers to make the change and raise more than $2 billion.

The Greens leader, Christine Milne, says while her party wants to discourage increased use of fossil fuel, it won't agree to the Prime Minister's proposal for higher fuel taxes.

CHRISTINE MILNE: Fuel excise should be about moving away from pollution, but he sees it just as a revenue raiser, as a tax on people who have no alternatives with public transport and no option with more fuel efficient vehicles.

Tony Abbott, in the United States, told president Obama that his fuel excise would act as a carbon tax. At the same time, he is removing carbon pricing in Australia, which will see an increase in greenhouse gas emissions.

The package that is going to be put to the Parliament on fuel excise would see revenue raised to go purely to roads, purely to add more congestion to our cities, more pollution from vehicles and not do a thing for public transport for getting people to be able to drive less, and when they do drive, to drive more efficiently.

LOUISE YAXLEY: Senator Milne says it's not negotiable.

CHRISTINE MILNE: They are not going to get a big hit on families who have no alternative with public transport, no alternative with fuel efficient vehicles, just a revenue raiser to build the roads that people don't want.

LOUISE YAXLEY: She denies the Greens are throwing away their ability to negotiate by giving a blanket no.

CHRISTINE MILNE: A balance of power means we make choices about legislation as it comes through, and all of the political parties in the Senate now share balance of power when this comes to Parliament. They've all made their choices in that context. It's pretty clear that everyone sees this for what it is.

LOUISE YAXLEY: The Government tried to sell its potentially unpopular move of putting up petrol - even by just 40 cents a week - by promising all the extra money raised would be spent on roads.

While it's now clear that extra money is not going to get through the Senate, the Government says it is still able to fund its roads package.

The Assistant Infrastructure Minister Jamie Briggs told Sky News on Sunday the money would still flow.

JAMIE BRIGGS: Yeah absolutely, it's $50 billion. It's the biggest spend an Australian Government has ever made into infrastructure, and part of that is, as you identify, the asset recycling fund which, when the sale of Medibank Private is concluded, that'll be, the funds from that will go into that.

LOUISE YAXLEY: But that asset recycling fund he refers to, which would help fund some of the infrastructure, is also set to be amended in the Senate, with the Greens, Palmer United and Labor likely to move amendments that would mean there'd be cost/benefit analysis done for all projects.

And the proposals would be disallowable by Parliament, meaning the Senate could reject them.